Home » UPDATE: Judge felt IPALCO execs were pressed to sell

UPDATE: Judge felt IPALCO execs were pressed to sell

| IBJ Staff
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In his decision to toss out a lawsuit against former top executives of IPALCO Enterprises Inc., U.S. District Judge David Hamilton said a confluence of circumstances faced by the executives persuaded him that they were reluctant to sell the company.

The industry was consolidating rapidly and deregulation loomed in California and other states. Both trends threatened to marginalize IPALCO, the executives realized.

Moreover, IPALCO faced making expensive changes to address pollution caused by burning high-sulfur coal.

Ultimately, the executives recognized they were obligated to prevent the stock from sustaining a large loss in value.

“The court is persuaded that IPALCO’s board came only reluctantly to the conclusion that it was prudent to explore the possible sale of the company,” Hamilton wrote.

Hamilton handed down the decision this morning.

The suit charged that the executives breached their fiduciary duty to investors when they agreed to sell the company to Virginia-based AES Corp. in 2000.

Many executives sold their stock before the sale closed in 2001 and AES shares began a prolonged slide.

Plaintiffs included about 1,800 participants in the company’s retirement plan who say they lost tens of millions of dollars.

In the 113-page ruling, Hamilton said plantiffs failed to make their case that selling to AES was irresponsible. "AES appeared to be a prudent and reasonable investment," he wrote.

 

 

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